Recovering Surplus money can be a great investment strategy for some real estate investors. Let’s talk about the surplus money. So where does the surplus money come from??
Well, here’s how it usually works. Borrower owes the bank $75k on his mortgage. Borrower can’t pay the Bank so the Bank forecloses on the property. As a part of the foreclosure process, the property gets appraised and sold by the Sheriff. Let’s say the property gets appraised at $125k and then sold for $130k. After Court costs and fees, the bank is only entitled to $75k so that leaves an additional $55k available. This excess money is called the surplus money.
Now typically, the Clerk of Courts will hold onto this money. So, the Court holds on to the Borrower’s $55k. It’ll collect interest. And then after many years, usually 5 or more, the Clerk will submit it to the department of unclaimed funds. And the State of Ohio will hold on to this money.
For a real estate investor, there’s an opportunity to make some money. Because typically, the Borrower isn’t a part of the lawsuit other than being named as a defendant. And the Borrower doesn’t know that the property has sold for more money than the Bank is owed. In fact, most Borrower’s are just happy that they don’t have to pay the Bank back so they don’t care about the money. But here’s where the real estate investor comes in, they will track down the cases with the money and then track down the Borrower. Since the Borrower wasn’t worried about this money in any way, the Borrower agrees to give the real estate investor 25-33% of the proceeds. As you can see, this is a Win-Win situation.
If you’re interested in obtaining surplus money, then give us a call at 740-346-2899.